Hoosier farmers were already hard hit when President Donald Trump raised tariffs in 2018. But a new round of tariffs from the U.S. and China amid a trade war also could hit consumers in the wallet, economists say.
Dwight Adams, dwight.adams@indystar.com

The Trump administration's latest round of tariffs in the nearly 18-month-old U.S-China trade war could have a devastating impact on Hoosier businesses, the Indiana Chamber of Commerce warned Thursday.

“We are hearing from a variety of members — from all kinds of manufacturers to agricultural companies — that this latest tariff war with China could have serious business implications for them and even throw some into a fight for survival,” Indiana Chamber President Kevin Brinegar said.

His comments came less than a week after the U.S. increased its tariffs on $300 billion worth of Chinese goods from 10% to 25%. China responded soon after, announcing that it will soon impose tariffs on $60 billion in U.S.-made goods.

A tariff on imported goods is a tax paid — in this case by American businesses — on goods and commodities brought into a country. And they're affecting Indiana on multiple fronts.

How China's tariffs affect Indiana

The state's soybean farmers have struggled as they deal with retaliatory tariffs and declining demand from China, the top importer of U.S. soybeans, in addition to poor weather and other conditions beyond their control.

For the state's manufacturers, tariffs fuel uncertainty and rising costs and lead them to look for ways to shift their additional expenses either by renegotiating supplier contracts or passing them along to customers.

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Tom Linebarger, the CEO of Indiana-based engine maker Cummins, recently told Bloomberg TV his company's business in China remains strong, but the multinational company still expects to pay $150 million in tariffs this year due to the trade war.

In a telephone interview, Brinegar of the Indiana Chamber said the organization's members fear higher prices related to the additional tariffs, particularly the recently announced 25% U.S. tariff, would lead to changes in consumption behavior and demand for their goods, eventually leading to cutbacks in production, employees layoffs and a slowing of the economy.

"The 25% has really intensified the concern from members, particularly in the manufacturing sector and agriculture," he said.

Indiana's annual exports to China worth $1 billion-plus

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The chamber, which advocates on behalf of Indiana businesses, estimates that Indiana exports about $1.1 billion worth of goods annually to China, though data from the U.S. Census Bureau and the U.S.-China Business Council puts that figure in the $2 billion range last year.

Top U.S. and Indiana exports to China includes gear boxes for vehicle and medical products like needles and catheters.

"This is such a big, big deal for Indiana," Brinegar said.

Brinegar said the chamber agrees with the goals of the Trump administration's trade strategy. China has gotten away with paying low comparatively low duties and encouraging innovation theft, he said. However, Brinegar doesn't think tariffs are the right solution. There are also questions about whether short-term pain would lead to long-term benefits, he said.

“That theft is estimated to cost the U.S. hundreds of billions of dollars each year, and it needs to stop," Brinegar said. "But there has got to be a better way than putting American businesses and jobs on the line. And we are communicating that to members of Indiana’s congressional delegation and the Trump administration.”